Mr. Speaker, I move that the 15th report of the Standing Committee on Public Accounts, presented to the House on Tuesday, February 19, 2002, be concurred in.
The public accounts committee made the report based on consideration of chapter 18 of the December 2000 report of the Auditor General of Canada pertaining to governance of crown corporations. Before I get into the findings of the committee report I will cover some factual pieces of information.
Crown corporations are administered under the Financial Administration Act. A board of directors oversees the management of each crown corporation. The federal government's responsibilities are as follows. First, it is responsible for appointing directors and chief executive officers to the boards of crown corporations including the level and degree of their remuneration.
Second, it is responsible for directives and regulations pertaining to crown corporations.
Third, it is responsible for approval of corporate plans and budgets.
Fourth, it is responsible for conducting special examinations every five years to provide the board of directors with an independent opinion of how well the corporation is being managed.
The report of the public accounts committee is based on the findings of the auditor general. First, specific examinations revealed that 66% or two-thirds of crown corporations have serious deficiencies in corporate and strategic planning. The deficiencies are broken into two categories. Some 38% are described as extremely serious and 28% as serious to a lesser degree. Nonetheless, two-thirds of all crown corporations have serious deficiencies in corporate and strategic planning.
Second, the government's process for approving corporate plans is deficient.
Third, performance and accountability are inadequate.
Fourth, the Treasury Board Secretariat and the Department of Finance exhibit a weak understanding of crown corporations and demonstrate limited skill in analyzing and interpreting financial statements.
That is a scathing indictment of the bureaucrats in the finance department. They are the people responsible for drafting the annual budgets of the federal government. It is no wonder that when we look at the most recent federal budget we see no provisions for making payments on our massive $547 billion national debt over the next three years. It is consistent with the findings of the report. The report says the bureaucrats in the finance department demonstrate limited skill in analyzing and interpreting financial statements. Why would we have bureaucrats in the Department of Finance who are not skilled at interpreting financial statements? It does not make sense. It is a scathing indictment of the competence of the Liberal government.
There are three more findings of special note.
First, audit committees lack financial literacy and accounting experience. This results in incomplete financial oversight. They lack the required capacity, knowledge and experience to effectively carry out their mandates. It begs the question of why. Why do we have incompetent people on the audit committees? How do they get there? Why do we not have competent people in these positions?
Second, members of boards of directors have serious weaknesses and lack key skills and capabilities in finance, administration and management. In my opening remarks I gave general information about crown corporations being managed by boards of directors appointed by the governor in council. The report finds members of the boards have serious weaknesses and lack key skills and capabilities in finance, administration and management. It again begs the question of why. Why do we have incompetent people on the boards of directors? Why were competent people not put there in the first place?
I might add that Canadians expect crown corporations to be managed effectively and efficiently. To find that the members of the boards of directors, who have been appointed by the government, are not qualified, raises some very serious questions. I will get to that in a minute but I want to cover the last and final finding.
The process of appointing crown corporation CEOs lacks transparency and accountability. Members of the boards of directors, CEOs and members of audit committees are being appointed by the government in a process that the report has found to be lacking in transparency and accountability, and they are not qualified to be there.
What I am getting to is the scandal in the public works department and the fact that the former minister, Alfonso Gagliano, used political interference to land jobs and contracts with crown corporations for friends and supporters of the Liberal Party. That is a violation of the code of ethics, the very code of ethics that the government brought in itself in 1995. It is the same code of ethics that the Prime Minister himself broke when he lobbied the head of the Business Development Bank of Canada to get a loan for his friend.
What we see is pork barrel, patronage politics, using political influence and breaching the code of ethics to get jobs and contracts for Liberal friends and supporters. The government has structured a system of appointing CEOs and members of boards of directors to crown corporations in a manner that lacks transparency and accountability and allows them to appoint Liberal supporters. In the end Canadians pay the price because our crown corporations are not being managed properly.
As the report itself found, the members of the boards of directors lack key skills and capabilities in finance, administration and management. In other words, they are completely unqualified to sit in those positions, yet they have been appointed through a process that lacks transparency and accountability so that the Liberal government can play games of patronage and land contracts and jobs for its friends and supporters. This is not only an obvious breach of the code of ethics but we know that at least two ministers, and this is a matter of public record, the Prime Minister and the former minister of public works, Alfonso Gagliano, openly breached that code of ethics by using improper political interference. This is a matter of ethics and integrity in government. The stench of corrupt activity is overwhelming.
The report by the members of the public accounts committee concluded that the appointment process for members to the board of directors of crown corporations lacked accountability. That was pretty clear in the findings. It stated that CEOs and members of the board of directors of crown corporations should have the required skills and experience to effectively carry out the objectives and mandate of the corporation. Once again it is an obvious statement and makes us wonder why this was never the case in the first place.
The Liberal government has been in power since 1993. Why have corporations not been managed properly from the beginning? Why has there not been an open, transparent manner of appointing CEOs and boards of directors who are competent and capable of fulfilling their mandate?
I think we know the answer to that question. It is the same reason that the Prime Minister lobbied the head of the Business Development Bank of Canada: to get a loan for a friend. It is the same reason that the former public works minister and his staff inappropriately interfered in the management of crown corporations: to land jobs for Liberal friends and supporters.
The report contains 10 recommendations but I will only highlight three specific recommendations. First, the selection criteria for members of audit committees must ensure that all members are financially literate and at least one member should possess the required knowledge and experience in financial management and accounting.
I stress the words “all” and “one” because the report itself had those words underlined. It is almost a facetious indictment of the government, in other words insinuating that there is not one member of those boards of directors who is financially literate. Surely the government could ensure that at least somebody on the board would know what he or she was doing instead of just stacking boards of directors of crown corporations with Liberal friends and supporters.
Another recommendation is that government and responsible ministers should take into account the skills of appointees to board chairs and directors of crown corporations.
Once again, stating the obvious, it is a scathing indictment of the Liberals and the degree to which they have been using inappropriate political interference to the detriment of Canadians. No wonder our crown corporations are not running effectively or efficiently when audits are done and we see that the proper processes were not being followed.
The final recommendation I want to highlight is that the process of appointing directors and CEOs to crown corporations must change. Not only must the appointment process of CEOs to the boards of these crown corporations change, but we need to seriously examine the code of ethics and the consequences that stem from inappropriate political interference and patronage and pork barrel politics.
I put forward two motions to the committee responsible for the public works department on two separate occasions in the last month requesting that Jon Grant, the former president of the Canada Lands Company, come before the committee to testify to the degree of political interference, patronage and pork barrel political games played by the former minister, Alfonso Gagliano. The Liberals stacked those committee meetings and refused to allow the committee to even call witnesses to try to understand or reveal the extent of corruption and wrongdoing. It is quite unbelievable.
Just for the record, and as it pertains to the former minister. Mr. Gagliano, and his inappropriate interference in crown corporations, I want to cover a background of deals by that individual, a former Liberal cabinet minister and the cabinet minister for whom the current public works minister has refused to request an RCMP investigation and for whom the Liberal whip has whipped Liberal backbenchers into preventing the committee from investigating.
In 1993, a background check revealed a link to convicted criminal Agostino Cuntrera. He remained a client of Mr. Gagliano's accounting business from the 1970s until 1993.
In 1998, 20% of all the cultural and sporting grant money given out by the federal government found its way into just 2 of the 301 ridings in Canada, the ridings of the Prime Minister and Alfonso Gagliano. Is anyone surprised? In 2001, he was accused of conflict of interest after Communication Canada subcontracted federal advertising contracts to a Montreal firm employing Alfonso Gagliano's son.
In 2001 it was also revealed that former Italian senator, Maurizio Creuso, who was convicted on corruption charges and has known Mr. Gagliano since 1983, received two lucrative government contracts from Canada Post and CMHC. These are the very crown corporations whose boards of directors are staffed with Liberal funds and supporters. Do members see the corruption? Do members see the extent of patronage and pork barrel politics?
These were complete violations of the code of ethics and fly in the face of everything that is right. It reveals everything that is wrong in the Liberal government and the extent to which it will go to engage in wrongdoing in an effort to shore up the Liberal machine.
In 2002 the former chair of Canada Lands Company alleged that Gagliano and his staff interfered in the day to day management of the crown corporation.
The former minister has quite a record indeed.
I will conclude by saying that, according to the auditor general, the Liberals should end their ability to play pork barrel politics when appointing directors of Canada's crown corporations. The evidence revealing that Liberal cabinet ministers were involved in these scandals has destroyed the notion that crown corporations are independent.
Liberal MPs are using crown corporations as a trough for their supporters and friends. Canadians are fed up with such a lack of ethics in the administration of government departments.